Gender Pay Gap Reporting: It gets worse before it gets better

The discussion around the Gender Pay Gap has moved from the shock of the published figures to ‘What can or needs to be done to reduce the gap?’. A quick fix is extremely unlikely. Ultimately, the Gender Pay Gap is all about creating the opportunities for women to (continue to) move up in the ranks. And yes, promotion of women might have been overdue but doing this in itself is the first sign a company is serious about resolving the issue, but it does not stop there.

When Dame Helena Morrissey spoke at the Alfi conference recently, she made two points very clear. First to get long term and lasting results it is likely to get worse before it gets better; and second, it takes time to change company culture and bias as well as professional development through education and gaining experience.

So, what can companies do for women to ensure ongoing career development? Here are five ways which we believe will make a difference

Change policy

Many argue working to change attitudes towards promoting women to more senior roles should be the first thing to tackle, but there is evidence that changing policy on diversity, employment, recruitment has a much bigger. Iris Bohnet, a behavioural economist at Harvard University says ‘diversity training programs have had limited success, and individual effort alone often invites backlash. Behavioural design offers a new solution. By de-biasing organizations instead of individuals, we can make smart changes that have big impacts’.

Analyse the data

Analysing the Gender Pay Gap data in detail could highlight business areas and departments where the issue is bigger, and possibly even show departments with a bias for not promoting women in more senior jobs. This enables a company to address these areas or even individuals immediately and supported by the aforementioned policy changes.

Mentoring programs

Over the past two decades, laboratory and survey evidence has suggested that men are significantly more likely to engage in salary negotiations than women, according to Harvard. Yet when women negotiate on behalf of another person they are as successful as men.Mentoring could help strengthen these negotiating skills but clearly the focus should not be only on remuneration but equally on improving the specific knowledge and skills, as well as understanding your industry and company.

Flexible working

Career breaks come in many different forms, although for women the main one is maternity leave. If this is longer than a year, when they to work they may face the “CV gap” which leaves them at a disadvantage. There is some work being done on Returnships, but more businesses should take this into account rationally and offer different approaches to working to ensure women should be able to return to jobs that match their skills. To retain talent, hey should also offer flexible working hours and the opportunity to work from home which makes returning to work more appealing.

Recruitment process

Companies should ensure that employment practices are fair and there is no bias in recruitment across teams nor in the way job descriptions are worded. Equally there should not be any positive discrimination and trying to recruit women into teams simply because of their gender, and vice-versa. In line with offering more flexible working, fairness in pay for maternity, paternity and shared parental leave must be considered, as well as pay for part time staff.

What next?

Clearly this is not an exhaustive list of how to close the Gender Pay Gap and the ultimately chosen direction of a company will very much depend on their specific situation. Nevertheless, the above suggestions are fairly easy to implement and will show to employees that the company is serious about making a change.

It is never going to be a quick fix and might take at least 3-5 years before there is a significant change visible in the reported pay gaps, but change is afoot.

In the short term, due to the lead time of implementing change, the gap might even initially widen before closing.

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With the decorations up, the last order date for Amazon nigh and most of us looking forward to at least a few days break, it’s always a good time to take stock of what’s been achieved over the last 12 months.

For AlgoMe this has been another exciting year.

January started in style with the launch of the AlgoMe Careers mobile app – giving professionals the opportunity to find their next career opportunity on the move.

Then in July we released our Industry Pulse Report – a check on what the industry was thinking about key topics such as Brexit, Pay Gap Reporting, MiFiD II and GDPR. Unfortunately it seems that the uncertainty that the industry was feeling due to Brexit is unlikely to have receded in the intervening period, but it’s good to see progress starting to be made in other areas such as gender and diversity.

In September we launched AlgoMe Community – a place for the Investment / Asset Management industry to come together, providing professionals with ways to grow their knowledge, profile and network. We’d like to say a big thank you to all of the members that have joined and contributed and look forward to continuing growth in 2019.

In November AlgoMe joined the Investment Association, becoming a Fintech member and working closely with Velocity, the Association’s new Fintech accelerator. This is a really exciting initiative and we’re looking forward to doing more with Velocity in the near future.

We also launched our Mentoring matching service in November – designed to help AlgoMe Community members connect with the best individuals within the community to help them to reach their career goals using a simple but intelligent process. If you haven’t already signed up to be a mentor or a mentee, please do spend 5 minutes now and tick off a New Year’s Resolution early.

As we go into the end of the year, we have also launched our survey on Investment Management, Fintech and the future of careers. The impact of Fintech on the industry is going to accelerate rapidly in 2019, but what has been less well documented is the impact on individuals, their careers and the skills they’ll need to succeed in a more digitised environment. We really value the input of our community members, so please spend a couple of minutes filling out the survey and we’ll make sure you’re the first to hear the results early next year.

From me and the AlgoMe team, I wish you all a very happy holiday season and look forward to another year of exciting announcements and change in 2019.

Rob

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I have always struggled to see a fair reason why employers should be allowed to ask about a potential hire’s current remuneration, other than to give them an advantage in pay negotiations.
It’s something which can only exacerbate existing pay inequalities and it’s abolishment can surely only be a positive thing.
Here the Guardian argues specifically about its impact with regards to the gender pay gap:
https://www.theguardian.com/commentisfree/2018/aug/23/gender-pay-gap-current-salary-question
I believe this has already been outlawed in some US states?
@Jonathan Max - would be interesting to hear the view from HR.

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The Investment Association recently gave the industry a boost when it announced the launch of Velocity, its FinTech accelerator. Designed to identify, develop and accelerate best in class firms with innovative solutions, Velocity will champion and facilitate the wider adoption of technology across the industry.

And AlgoMe will be involved in this too, which is why I’m excited to announce we are now a member organisation of the Investment Association as an official FinTech member and have been named a "company to watch" by Velocity.

Challenging Times
The Investment Management industry faces major challenges and opportunities from forces such as digital technology, pressure on fees and increased regulation, while at the same time there are widespread changes in the workforce and their expectations.

To date, Investment Management has both been fairly insulated from the challenges posed by agile FinTech competitors, but also distant from the opportunities offered by the new technologies and ways of thinking that such companies bring.

Bringing FinTech closer
Velocity is a fantastic step towards accelerating the adoption of FinTech. It has received support and endorsements from both inside and outside the industry, including from the Chancellor of the Exchequer, Phillip Hammond, who was enthusiastic about the initiative at a recent City event.

To drive change and innovation, the industry needs to connect across different disciplines and areas of expertise, driving new ways of thinking and fostering cultural change.

Without the benefit of emerging FinTechs and their external expertise, it will be hard for incumbents to harness the benefits of emerging technologies such as Straight Through deal Processing (STP), Distributed Ledger Technology (DLT), and Artificial Intelligence (AI) in areas such as risk and compliance, securities trading and investment decision making.

Our Mission
AlgoMe's mission is to connect the Investment Management industry and empower professionals to manage their careers. Our new product, AlgoMe Community, is placed to become the hub for the discussion between FinTechs and the companies and professionals in the wider Investment Management ecosystem.

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Brexit, MiFID II, GDPR, Gender Pay Gap and Diversity are the themes we consider top of mind currently which is why we’ve created the Summer 2018 AlgoMe Industry Pulse Report.

We wanted to get under the skin of some of these key events and burning issues for 2018. In doing so, we revealed some very interesting results and statistics.

Given a choice of 7 cities, Dublin, Paris and Amsterdam are the top three choices for Asset Managers, Fintech and Financial Services employees to relocate to following Brexit. While 54% would not consider moving as a result of Brexit.

When it comes to regulation; we are not surprised to find MiFID II and GDPR will affect over 60% of the roles in the industry.
Positively, 59% believe Gender Pay Gap Reporting will improve the career progression of women.

Please read the report for the full information and do get in touch if you would like to know more about your industry workforce.

We partnered with Imperial College Business School for a panel discussion about the Impacts of FinTech to careers in Investment Management. We were keen to marry up the collective experience of the panel, and their insights and views, with the audience. Equally we wanted to get a feel for what the next generation of Investment Management professionals should set in their sights.

Based on the findings from our soon to be published report The Disrupted Career - FinTech, Investment Management and future careers, we created a truly interactive debate as we put the questions we used in our survey to our audience, enabling to give real-time feedback via the AlgoMe Community mobile app.

The combined experience of our panel is both lengthy and varied. For example, moving from working within an investment company, joining a consulting company and also joining other industries where core skills are transferable (eg. within data science), indicated that careers are fluid and certainly not predefined. The key trend however was all the panel members, throughout their careers. kept developing and adding to their skillsets.

Are career paths less well defined due to the changes happening in the industry?

There was a general view that indeed career paths are now less well defined than before, and technology and general innovation were changing these paths as existing positions in the industry will likely be displaced by other new ones. The new careers demand an understanding of data and how they can be leveraged to create efficiency, greater understanding of clients, investments and decision making. As the technology impact is just starting to hit the Investment Management industry, career paths will be impacted in the next 10 years to a great extent, beyond what we imagine today. Some research indicates that 90% of today’s jobs will not exist in 10-15 years.

What skills will be the most important to develop careers in Investment Management?

As already mentioned, skills linked to data science will be important. Along with this, the ability to interpret what it presents, to further support risk management, controls, understanding of clients and trends in the market as well as supporting (investment) decision making. These skills will be in demand for both junior and senior positions and given the technology developments ahead of us will likely change and become more complex.

What will, and what can, you do to progress your career?

The panel indicated that if they were looking at their 20-year younger self, they would not have seen themselves in the positions they are today. Nevertheless, a key ‘red line’ through their careers was the development of their main professional interest and continuously developing the associated skills, be it business management, data and analytics, or information systems engineering. All equally being influenced by the need of these aforementioned hard technology skills.

Rob Carter stressed the value of having mentors throughout your career, people that can guide you and hold a mirror up for you. Hendrik Grunditz mentioned the benefits of networking, staying in touch with people and create a reputation of being nice, delivering constant high quality and be committed. Ruben Lara added to this the need for the softer skills and ability to influence, manage stakeholders and communication.

We believe the Investment Management professional career is about to change direction, and for some this will be a radical change. It seems everyone is in agreement and there are very exciting times ahead, especially for those with a passion for technology and change.

I read this article in the Financial News and came away with a feeling as if we should be concerned.

Yes CEO's take on big responsibilities but in any of the examples quoted their pay in 2018 has not gone below the £1 million mark and previous years have been even significantly better. Not to mention the potential bonuses being paid in the next years.
The article almost makes you think you should feel sorry but I bet that many others working in the industry have faced equal total remuneration drops and they do not start at the level of CEO remuneration.

Reverse mentoring (someone younger or more junior providing mentoring to someone older or more senior) seems like an idea who's time has come - lots of interesting thoughts and initiatives kicking off around this.

The all-round benefits of reverse mentoring
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In 1995 the analogue world was set to change radically. At this point in time, a mere 16 million people were using the internet globally. Fast forward to today and the figures are somewhere around the 4 billion mark. Jack Welch, the former GE CEO, was able to envisage how the internet would transform business. He applied his visionary thinking and put GE’s youngest employees to work by getting them to teach 500 of their top executives how to use the internet. As a result, he upskilled a generation of business people and he also popularised ‘reverse mentoring’.

Reverse mentoring is when the younger generation takes the lead role with the senior person as the mentee. It is an extremely valuable business method – especially during the times of disruption. The internet, social media and emerging technologies such as AI and Fintech, and of course, the ever changing fabric of society as a whole have been in a constant state of flux for decades and it can often be hard to keep pace with change.

Benefits for Diversity & Inclusion
As noted by Forbes; reverse mentoring can facilitate organisational goals such as increasing millennial retention, fostering inclusivity, and maintaining competitive advantage. According to a recent article by MarketWatch, reverse mentorships can help build a more inclusive workforce. 20% of millennials (ages 18 to 34) identify as LGBTQ, compared to 7% of Baby Boomers, and almost of half say that a diverse and inclusive workplace is an important factor in their job search, as well as work-life balance.

Brenda Trenowden, CFA, global chair of the influential diversity group, the 30% Club, believes it helps organisations embrace inclusion. “The CEO has to really commit to drive change. If the CEO doesn’t commit to this as a business imperative, then it is hard to see anything changing. When senior leaders become involved in reverse mentoring, and really hear first-hand about some of the challenges that the more junior people face, that will really help.” So the writing is really on the wall here.

Benefits for Client Relationships
It’s imperative for senior management to be aware of and involved in new technologies and reverse mentoring provides the opportunity to do this. While there are benefits for both the older and younger generations within the company; what is just as interesting is the potential benefit to the customer or client as they are equally technically savvy.

Reverse mentoring, which has still yet to be widely adopted, is today one of the single biggest opportunities for organisations to leverage knowledge and differentiate themselves – making themselves more attractive to customers.

There are two main reasons for this:
An inversion of the corporate age pyramid; we are entering a new era where the majority of the workforce will be made up of technically savvy, agile individuals who are typically hierarchy-adverse.
The speed of business transformation and impact of technology on the fundamentals of the corporate landscape is disrupting old models at an unprecedented pace.
Turning Senior Management Into Early Adopters
When it comes to technology, there is often a great fear of it among senior management. They will often shy away from group training where they might expose their lack of knowledge and experience to their tech savvy junior team members. This is damaging all round.

More positively, the new generation of talent is made up of digital natives and they will want to influence the direction of the business they are working in, but they are also happy to share their knowledge and insight. Reverse mentoring is a great way of doing this and by putting people together into face to face meetings, it’s highly effective and creates a level of understanding between generations without anyone feeling vulnerable or at a disadvantage.

In an excellent article from Microsoft, “Reverse mentoring; How millennials are becoming the new mentors”, it is great to see how reverse mentoring can benefit both individuals involved across a range of topics (“learning to better collaborate and leverage each other’s strength”). If we want to avoid the ‘male, pale and stale’ stereotype, surely the investment management industry needs to take a leaf from this book?

In conclusion, aside from technical skills and knowledge that can be passed from younger to older workers, there are significant cultural benefits that may be realised through reverse mentoring; be it in breaking down stereotypes between generations or just learning how best to communicate and engage with people who might know more than you!

Please do visit our new Mentoring section where you can create a profile and find a mentor within the AlgoMe Community.